Boston condo prices to drop? What the experts say
Boston Condos for Sale and Apartment Rentals
Boston condo prices to drop? What the experts say
f you’re thinking about buying or selling a Boston condo soon, you probably want to know what you can expect from the housing market in 2024. In 2023, higher mortgage rates, confusion over Boston Seaport condo pricing headlines, and a lack of homes for sale created some challenges for buyers and sellers looking to make a move. But what’s on the horizon for the new year?
The good news is, many experts are optimistic we’ve turned a corner and are headed in a positive direction.
Boston Condo Mortgage Rates Expected To Ease
Recently, mortgage rates have started to come back down. This has offered hope to buyers dealing with affordability challenges. Mark Fleming, Chief Economist at First American, explains how they may continue to drop:
“Mortgage rates have already retreated from recent peaks near 8 percent and may fall further . . .”
Jessica Lautz, Deputy Chief Economist at the National Association of Realtors (NAR), says:
“For home buyers who are taking on a mortgage to purchase a home and have been wary of the autumn rise in mortgage rates, the market is turning more favorable, and there should be optimism entering 2024 for a better market.”
The Supply of Homes for Sale May Grow
As rates ease, activity in the housing market should pick up because more buyers and sellers who had been holding off will jump back into action. If more sellers list, the supply of homes for sale will grow – a trend we’ve already started to see this year. Lisa Sturtevant, Chief Economist at Bright MLS, says:
“Supply will loosen up in 2024. Even homeowners who have been characterized as being ‘locked in’ to low rates will increasingly find that changing family and financial circumstances will lead to more moves and more new listings over the course of the year, particularly as rates move closer to 6.5%.”
Home Price Growth Should Moderate
And mortgage rates pulling back isn’t the only positive sign for affordability. Home price growth is expected to moderate too, as inventory improves but is still low overall. As the Home Price Expectation Survey (HPES) from Fannie Mae, a survey of over 100 economists, investment strategists, and housing market analysts, says:
“On average, the panel anticipates home price growth to clock in at 5.9% in 2023, to be followed by slower growth in 2024 and 2025 of 2.4 percent and 2.7 percent, respectively.”
To wrap it up, experts project 2024 will be a better year for the housing market. So, if you’re thinking about making a move next year, know that early signs show we’re turning a corner. As Mike Simonsen, President and Founder of Altos Research, puts it:
“We’re going into 2024 with slight home-price gains, somewhat easing inventory constraints, slightly increasing transaction volume . . . All in all, things are looking up for the U.S. housing market in 2024.”
Boston Condos and the Bottom Line
Experts are optimistic about what 2024 holds for the housing market. If you’re looking to buy or sell a home in the new year, the best way to ensure you’re up to date on the latest forecasts is to partner with a trusted real estate agent.
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Ford Realty is located in 137 Charles Street in Beacon Hill
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It’s no surprise that home prices in downtown Boston have increased over the past 18 months due to the COVID-19 pandemic. Problems with low inventory and Boston condo buyers wanting to leave urban areas (Boston suburbs prices have risen faster than the city proper’s) or create better work-from-home situations have driven up real estate in the entire metro area.
This has also been true across the country. However, according to Forbes.com, home prices are starting to drop nationwide, citing increased inventory and buyer fatigue as causes. More likely though, this is just part of the normal season trends we see in the real estate market both locally and nationally every year.
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Boston condo prices to drop? What the experts say
A worldwide pandemic and an economic recession have had a tremendous effect on the Boston condo for sale market. The uncertainty brought about by both has made predicting consumer behavior nearly impossible. For that reason, forecasting Boston real estate prices have become extremely difficult.
Normally, there’s a simple formula to determine the future price of any item: calculate the supply of that item in ratio to the demand for that item. In the Beacon Hill condo and Seaport condo market right now, demand far exceeds supply. Mortgage applications to buy a home just rose to the highest level in 11 years while the inventory of homes for sale is at (or near) an all-time low. That would usually indicate a strong appreciation for home values as we move throughout the year.
The Real Estate Experts Take
Some experts, however, are not convinced the current rush of purchasers is sustainable. Ralph McLaughlin, Chief Economist at Haus, explained in their June 2020 Housing Market Forecast why there is a concern:
“The upswing that we’ll see this summer is a result of pent-up demand from homebuyers and supply-in-progress from homebuilders that has simply been pushed off a few months. However, after this pent-up demand goes away, the true economic scarring due to the pandemic will begin to affect the housing market as the tide of pent-up demand goes out.”
The virus and other challenges currently impacting the real estate industry have created a wide range of thoughts regarding the future of home prices. Here’s a list of analysts and their projections, from the lowest depreciation to the highest appreciation:
- CoreLogic: Year-Over-Year decline of -1.5%
- Haus: Year-Over-Year decline of -1%
- Zillow: Year-Over-Year change is forecasted to bottom out at -0.7%.
- Home Price Expectation Survey: Decline of -0.3% in 2020
- Fannie Mae: Increase of 0.4% in 2020
- Freddie Mac: Increase of 2.3% in 2020
- Zelman & Associates: Increase of 3.0% in 2020
- National Association of Realtors: Increase of 3.8% in 2020
- Mortgage Bankers Association: Increase of 4.0% in 2020
We can garner two important points from this list:
- There is no real consensus among the experts.
- No one projects prices to crash as they did in 2008.
Boston Real Estate and the Bottom Line
Whether you’re thinking of buying a downtown condo or selling your high rise condominium, know that home prices will not change dramatically this year, even with all of the uncertainty we’ve faced in 2020.
Boston Real Estate for Sale
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Updated: Boston Real Estate 2021
